An exchange during Citicorp’s 2011 Q4 Earnings Call between Brennan Hawken - UBS Investment Bank, Research Division and Citicorp CFO John C. Gerspach went like this:
Brennan Hawken: Just you had said that the $2.5 billion to $3 billion decline that you expect for 2012 does not include unforeseen episodic issues. But do you bake in an elevated level of legal expense in those assumptions? Because it does seem like that’s part of the environment that we’re in, at least for the near term.
John Gerspach: Yes. I would say that the — when we’re talking about a $2.5 billion to $3 billion reduction, and that works you down to a number. You should assume that in that number, there is some level of ongoing litigation-type expenses. But we wouldn’t expect it to be a repeat of 2011 where we had $2 billion worth of episodic legal and related expenses.
Starting with last year’s actuals or overall budget may be a starting point, but the more interesting question from my perspective is how that budget gets allocated. Therein lies the challenge.
After 2 years in development, the CLM has finalized a universally accepted set of Litigation Management Guidelines for use between insurance companies and insurance defense firms. The CLM welcomes comments and questions.
Greetings from Pittsburgh, where the winter scene looks much as it did back in 1977, the last time we saw this much snow. As the weather cycle repeats itself, I’m reminded how back then, I was just a goofy little kid, thankful for the 2-hour delay St. Edward Elementary bestowed upon us after about a foot of snow fell overnight. Good times.
As I shoveled my driveway for the third time in as many days, I got to thinking about how data can start piling up just as easily: Legal invoices, budgets, analyses, adjustments, reserve schedules – you name it. I also began to find creative places to put it, all of which are problematic - back out on the street, next to the fire hydrant, in my neighbor’s driveway (that’s actually ok. They deserve it. They’re in Hawaii for three weeks). (Read More)
Food giant Kraft Foods has rewarded one of its law firms for its common sense approach to reducing and controlling legal costs. This in and of itself isn’t so surprising, inasmuch as companies like DuPont, United Technologies and others have taken similar actions. The big difference is that Kraft has lauded Morgan Lewis for controlling legal costs using the billable hour, as opposed to alternative fee arrangements.
Given the rush to alternative fee arrangements since the recession began, might we be seeing a new equilibrium emerging, where alternative fees drive new thresholds of billable hour efficiency?
Kraft Lauds Morgan Lewis’ Service
Once reserved almost exclusively for big business, overtime lawsuits are targeting smaller companies. Part of this shift is the result of large organizations becoming more adept at defeating such suits. Additionally, as one attorney put it, “there are only so many class actions you can bring against Wal-Mart before you’ve exhausted the pool.”
An Overreach on Overtime?
This trend has not been good news for small business, where owners and managers have little experience in controlling legal costs. Sacramento-based Foremost Superior Marble settled an overtime suit brought by three former employees. The suit lasted eighteen months and cost the company $400,000 in legal fees. As the economy limps along, expect more small- and middle market companies to face similar suits.
There is one downward trend, however, in California. (Read More)
Results of a fourth quarter 2009 survey of 408 public and private companies found litigation is still on the rise. Some 83% of attorneys responded that their companies were sued in 2009, up from 79% in 2008. In addition, 42% of those surveyed expect to see litigation increasing in 2010. Houston-based Greenwood Associates conducted the survey on behalf of Fulbright and Jaworski LLP.
These results should come as no surprise. The current economic climate exacerbates companies’ struggles with controlling legal costs, as increased regulation, employment issues, bankruptcies and other issues continue to dominate the schedules of GCs.
Robert Half Legal’s recent survey lends further support to clients seeking greater value for their dollar.
Corporate counsel seeking more value from outsourced law services
The following article discusses how some lawyers at higher-priced firms are jumping to smaller firms with lower rates, in response to client demands. This is yet another way the market is dealing with the repricing of legal services.
Lawyers Jump to Smaller Firms with Lower Rates
With prices of companies beaten down and VC activity percolating, there are signs that M&A activity is starting to heat up (although that might be a relative term). As acquiring companies begin to see better value, the demand for M&A legal services is on the rise, at least in the San Francisco area.
Law Firms Make Case for Growth
